TDS APPLICABLE ON SAC 998555
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04 September 2023
Is TDS applicable on SAC 998555 For Tour operating service ?
04 September 2023
If tour package services are taken by the corporates, then corporates are required to deduct TDS @ rate of 1% or 2% based on the status of the Tour Operator. If the tour operator is an Individual or HUF, the rate is 1%, and for others, it is 2%
20 January 2024
Circular: No. 5/2002, dated 30-7-2002.
Corporate employers, tour operators and travel agents enter into agreements with hotels with a view to merely fix the room tariffs of hotel rooms for their guests/customers. Such agreements, usually entered into for lower tariff rates, are in the nature of “Rate-Contract Agreements”.
A rate-contract, therefore, may be said to be a contract for providing specified types of hotel rooms at pre-determined rates during an agreed period.
Where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation ‘taken on regular basis’, as there is no obligation on the part of the hotel to provide a room or specified set of rooms. So, the provisions of section 194-I while applying to hotel accommodation taken on regular basis would not apply to rate contract agreements.
However, in such cases, Section 194C which requires TDS on payment to contractor will come into play as the transaction is on principal to principal basis and tour operators are not acting as a pure agent on behalf of there customers who are using the Room services.. Therefore TDS on rate contract agreement is required to be deducted under section 194C by tour operator/travel agent.
An exception to the said rule could be there. In case where the tour operator pays for the room charges either directly or through tour operator and the transactions of the tour operator could be categories as the transaction of pure agent for their customers then TDS provision would not be applicable in the hands of the Tour operator. However, onus would be on the tour operator to prove the nature of transaction as that of “Pure Agent”.
TDS Rates u/s 194C:
At the rate of 1% in case of every individual and HUF.
At the rate of 2% in case of other than individual and HUF.
Corporate employers, tour operators and travel agents enter into agreements with hotels with a view to merely fix the room tariffs of hotel rooms for their guests/customers. Such agreements, usually entered into for lower tariff rates, are in the nature of “Rate-Contract Agreements”.
A rate-contract, therefore, may be said to be a contract for providing specified types of hotel rooms at pre-determined rates during an agreed period.
Where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation ‘taken on regular basis’, as there is no obligation on the part of the hotel to provide a room or specified set of rooms. So, the provisions of section 194-I while applying to hotel accommodation taken on regular basis would not apply to rate contract agreements.
However, in such cases, Section 194C which requires TDS on payment to contractor will come into play as the transaction is on principal to principal basis and tour operators are not acting as a pure agent on behalf of there customers who are using the Room services.. Therefore TDS on rate contract agreement is required to be deducted under section 194C by tour operator/travel agent.
An exception to the said rule could be there. In case where the tour operator pays for the room charges either directly or through tour operator and the transactions of the tour operator could be categories as the transaction of pure agent for their customers then TDS provision would not be applicable in the hands of the Tour operator. However, onus would be on the tour operator to prove the nature of transaction as that of “Pure Agent”.
TDS Rates u/s 194C:
At the rate of 1% in case of every individual and HUF.
At the rate of 2% in case of other than individual and HUF.
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